Eli Lilly and Co. LLY, +1.79% said Friday it will divest its remaining stake in Elanco Animal Health ELAN, +0.64% via an exchange offer. Lilly shareholders will be able to exchange all, some of none of their shares of Lilly common stock for Elanco common stock owned by Lilly.

The company retained an 80.2% stake, or 293.29 million shares, in the animal health company when it completed its IPO in September of 2018.

"It's the right time to finalize the separation, let Elanco chart its future as a standalone company, and focus Lilly on our core mission to create human medicines that make life better for people around the world," Lilly Chief Executive David Ricks said in a statement. Lilly shareholders will be able to exchange their shares for Elanco shares at a 7% discount, subject to an upper limit of 4.5262 shares of Elanco stock per Lilly share.

If the upper limit is not in effect, for each $100 of shares of Lilly common stock accepted in the exchange offer, tendering shareholders would receive approximately $107.53 of Elanco common stock.

"These values will be determined by reference to the simple arithmetic average of the daily volume-weighted average prices of Lilly common stock and Elanco common stock on the New York Stock Exchange during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer, which would be March 4, March 5, and March 6, 2019, if the exchange offer is not extended or terminated," said the statement.

Lilly shares rose 1.8% in premarket trade and have gained 58.3% in the last 12 months, while the S&P 500 SPX, +0.07% has gained 4.9%.